If the most mentioned in the first two years was blockchain and digital currency, the hottest words last year were metacosm and NFT.
On the last day of 2021, Jay Chou posted a picture of an illusion bear on his social media account, bringing the wave of NFT from 2021 to 2022.
Blockchain technology has enabled the mapping of currencies in the virtual world, resulting in a large number of homogenized cryptocurrencies, creating a wave of investment in digital currencies in recent years.
The emergence of non-homogeneous NFTs has made many people see the possibility of mapping the virtual world to the entire real world.
Thanks to the promotion of one new wave after another, NFTs quickly went out of the circle, replacing the popular DeFi, and the frequent trading of high-priced art, breaking people's cognition, more and more investors were attracted to it.
In the third quarter of 2021, the number of buyers of NFTs was about 260,000, compared to only 19,000 in the same period of 2020. Meanwhile, according to a CNBC survey, more than 10 percent of U.S. adults own cryptocurrencies.
According to The Statistics of Chainalysis, the current market size of NFTs has swelled to $44 billion, which is one of the hottest areas in the crypto field.
And in the next 4 years, its size is expected to increase by 4 times. How can such a large piece of fat be let go?
Recently, IRS officials announced plans to start cracking down on NFT creators and investors who evade paying taxes.
The amount of tax owed is currently difficult to actuarially calculate, but Arthur Teller, chief operating officer of crypto tax software platform TokenTax, estimates that the total tax revenue of NFTs will reach billions of dollars.
Why are there so many?
Rich people play art
As for what NFT is, I have already elaborated in the previous article, so I will not expand on it here.
It is essentially a unique digital asset.
In fact, as early as October 28, 2021, Forbes published an article on the issue of NFT taxation.
NFTs can be used both as digital assets and as physical tokens. That is, when the NFT virtual asset is confirmed, it can also confirm the right to the physical asset. Based on such characteristics, NFTs, which were originally only encrypted works of art and personal avatars, are likely to develop into indispensable things such as real estate and vehicles in the future.
Media data is the essence of the casting of NFT collections, and if the royalty rights and ownership of the work itself are lost, the NFT work itself will lose its secular value.
However, because the rise is too fast, the NFT market has no regulatory constraints and no clear legal provisions, so the rights and obligations of buyers and sellers are basically not guaranteed when trading. The harm of people with hearts is getting bigger and bigger, which in turn affects the normal development of the industry.
By buying NFTs and reselling them, criminals can transfer cryptocurrencies related to illegal activities to "clean" crypto wallets.
Earlier, THE DIRECTOR OF THE NATIONAL TAX, CHARLES RETTICH, warned that NFTs are inherently invisible, and that cryptocurrencies that are equally invisible cost the U.S. about a trillion dollars in taxes each year.
At present, the tax departments of most countries still only regard cryptocurrencies as stock-like property, although they can be taxed, but how the jurisdiction of the taxation right should be divided, there is still no accurate statement, and there is no conclusion on which NFT tax should be charged.
Although the USSA has not yet explicitly stated that NFTs are collectibles, it leaves some room for interpretation later. But tax experts appear to have characterized it, grouping it with coins, stamps, metals, antiques and marking it as a tangible collectible.
Since they are collectibles, most of them are of course owned by the rich.
In the United States, Bitcoin and Ethereum and other digital currencies appreciated, with a top tax rate of 23.8%. In contrast, NFTs as collectibles have a much higher tax rate on capital gains.
The NFT levy is levied on any value added that the buyer accumulates after purchasing the NFT.
For example, if someone holds an NFT asset for less than a year and sells it, it will produce short-term capital benefits, and the maximum tax rate for short-term gains is as high as 37%! At the same time, investors whose annual income exceeds a certain threshold are also subject to an additional 3.8% net investment income tax.
Only when the assets are held for more than 1 year and then sold, the long-term capital gains are obtained.
In other words, this is to encourage investors to hold for a long time and reduce the frequency of transactions to reduce the possibility of illegal transactions in the NFT market. But even long-term capital gains are levied at the federal top tax rate of 28 percent. At the same time, the 3.8% surcharge also applies.
For whom is it sweet for whom?
But can it really be simply defined as a collectible?
This issue is bound to be debated for a long time. Because it's still a whole new field.
Poor people play games
Domestically, the game industry has a long-standing saying:
"Game companies are talking about going to sea, and overseas companies are talking about chain games."
Compared with the coin speculation in the past few years, NFT games are more strategic and entertaining, and are more suitable for the general public.
At present, the relevance of chain games and traditional games is getting higher and higher. For example, "Sorare" gets the official authorization of players from more than 180 institutions such as Juventus, Liverpool, the Yellow River and the German Football Federation, and "NBA Top Shot" gets the authorization of the football league La Liga and the NBA.
If NFT artworks are the toys of the rich in developed countries, then their application in games is in the arms of many poor people.
They play games not for leisure and relaxation, but for a different kind of work.
In 2021, the rich in the developed world are battling each other in this huge free casino, and the little residue that leaks between their fingers has fed many poor people around the world who earn a living by gold.
The French sociologist Roger Kellos once defined a game in Games and People, and one of the important things is. That is, without productivity, participants cannot be substantially rewarded.
But NFT games run counter to this definition and carry a high-yield nature.
The biggest feature of this type of game is that the resources in the game world are stored in the blockchain and players trade props with each other, which is essentially changing the ownership of the props.
Taking the world-famous "chain game king" Axie Infinity as an example, players' comments on this game are simple and rude:
"The game experience is actually half, the restraint between pets is extremely unbalanced, and playing this game is to make money."
The game currently has 3 million daily active players, and the highest-valueD NFT pet is as high as $2.33 million. In less than a month, its DAU grew by more than 400%, of which 60% was located in the Philippines.
The Philippine Treasury Department believes that all gains made by players in play-to-earn games such as Axe Infinity are subject to personal income tax.
On the one hand, this will certainly promote the development of chain tourism towards compliance and order.
But from another point of view, at the height of the epidemic, it was Axe Infinity, a game that solved the survival dilemma of the locals in disguise. Whether it is the NFT or the entire crypto industry, it belongs to the cutting-edge technology industry, as an underdeveloped country, the Philippines can take this opportunity to attract foreign funds to promote the development of the local NFT industry, so as to obtain greater benefits.
One is short-term benefits, and the other is long-term development opportunities. How do I decide?
The Philippines is not the only country that is addicted to NFT games. According to a report presented by independent research institute Finder, the lower the per capita income, the higher the penetration of NFT games. The Philippines, Thailand and Malaysia rank among the best in the world with national NFT asset holding rates of 32%, 27% and 24% respectively.
Taken together, NFT games have improved considerably compared to a few years ago, although there are still advantages and disadvantages, which also makes regulators and game manufacturers in various countries have different views on this.
Even South Korea, as a developed country, is highly enthusiastic about this.
According to statistics, the population of South Korea trading cryptocurrencies in 2021 exceeds 10% of its total population, and this boom has even led to a unique "kimchi premium" for cryptocurrency exchanges in South Korea.
Based on the enthusiasm of the people, Korean game companies are also more and more interested in NFTs. Especially in August last year, after the introduction of the blockchain function of MIR 4, it was a global success, and the popularity in related fields became increasingly high. South Korean game companies are preparing to show their fists, and many even write this into their 2022 New Year's message.
For example, the CEO of NetZen said that it will participate in the trend and graft the blockchain business in the game; KakaoGames has also disappeared, and will expand its business to NFTs, metaversics and sports...
Recently, however, the South Korean government issued a new rule:
Most of the games have a high-yield nature and will not be able to get ratings in the future.
This ban can be said to be smashing the jobs of game companies. The reason for this is also very sharp: when developing NFT games, did you ever think about the protection of underage players?
Chain games are different from the coin circle, and the form of games, the threshold and cost of participation are lower, and it is likely that minors will be involved in it.
The South Korean government is boycotting NFT games as a state, and Steam, the world's largest game publishing platform, is sitting in the same way as a company. Steam introduced new rules in October 2021 that prohibit the use of blockchain technology or allow players to exchange NFT game releases.
After the rule was released, more than 20 blockchain game companies, including Night for the Future, sent a letter to ask for the retraction of the rule. However, it is well known that G Fat does not move whenever a decision is made.
epilogue
The United States wants to tax NFT collectibles, no matter what the purpose, whether it wants to catch a wave of oil or water, or really wants to promote the healthy development of industry compliance, NFT investors to pay taxes seems to be a foregone conclusion.
This is essentially a tax on the rich.
And in the small Asian countries where NFT games are prevalent, they either suppress or want to tax a piece of the pie, in short, it is not friendly. And in the social culture of the mainland, what is the name of the game that can make money?
gambling. The result is self-evident, and there is still a long way to go if the chain tour wants to enter China.
2022 has only just begun, but the days of NFT are already not very good.